Dollar Tree Q2 Earnings Miss by a Penny - Analyst Blog
August 23 2013 - 10:00AM
Zacks
Dollar Tree Inc. (DLTR) reported second-quarter
fiscal 2013 earnings of 56 cents per share, a penny below the Zacks
Consensus Estimate. However, it increased 9.8% year over year.
The company posted revenue growth of 8.8% on a year-over-year basis
in the quarter to $1,854.9 million but fell short of the Zacks
Consensus Estimate of $1,859.0 million. During the quarter, sales
benefited from a 3.7% increase in comparable store sales (comps)
over the prior-year period comps rise of 4.5%.
Quarterly Details
Dollar Tree's quarterly gross profit climbed nearly 8.2% year over
year to $648.7 million, while gross margin contracted 20 basis
points (bps) to 35.0%. On the other hand, selling, general and
administrative (SG&A) expenses crept up 7.8% to $447.4 million.
However, as a percentage of revenues, it contracted 30 bps to
24.1%.
Consequently, operating income for the quarter rose 9.2% to $201.3
million. Operating margin came in at 10.9%, up 10 bps from the
year-ago period.
Balance Sheet
Dollar Tree ended second-quarter fiscal 2013 with cash and cash
equivalents of $413.7 million compared with cash balance of $379.8
million at the end of second-quarter fiscal 2012.
Merchandise inventories were $1,018.3 million compared with $891.7
million as of Jul 28, 2012. During six months ended Aug 3, 2013,
the company spent $199.6 million on capital expenditure as against
$140.1 million recorded in the six months ended Jul 28, 2012.
Share Repurchase
During the quarter, the company bought back 0.9 million shares
worth about $43.7million. At quarter-end, Dollar Tree had shares
worth $747.7 million remaining under its share buyback program.
Store Update
In the quarter, the company further expanded its store network by
opening 81 stores, expanding or relocating 32 stores and shutting
down 2 stores. This brings the company’s total store count to 4,842
in 48 states and 5 Canadian provinces as of Aug 3, 2013.
Retail selling square footage grew 7.0% year over year to 41.9
million square feet.
Looking Ahead
For the third quarter of fiscal 2013, Dollar Tree expects total
sales in the range of $1.87–$1.92 billion on the back of low to mid
single-digit comps growth while the company expects square footage
growth of 7.2%. Further, the company anticipates earnings in the
range of 54–59 cents per share in the upcoming quarter. Tax rate
for the third quarter is expected to be 37.0%.
For fiscal 2013, the company anticipates sales to reach the
$7.85–$7.97 billion range based on low single-digit positive comps
while the company expects square footage growth of 7.3%. Dollar
Tree projects earnings in the range of $2.65–$2.77 per share for
fiscal 2013, excluding any impact from share repurchases.
For 2013, the company expects capital expenditures to be in the
range of $320 million to $330 million. Depreciation and
amortization expenses are projected to range from $190 million to
$195 million for the full year. Tax rate for full year is expected
to be 37.7%.
The company remains on track to open 340 new stores, relocate 75
stores and expand nearly 415 projects in the U.S. and Canada for
fiscal 2013.
Dollar Tree is considered as one of the best-positioned dollar
store concepts, especially with its evolving multi-price point
chain. We believe that the company is doing a commendable job
internally in managing controllable inputs, including reducing stem
miles, while increasing back-haul opportunities at the same
time.
Dollar Tree currently carries a Zacks Rank #3 (Hold). Stocks that
are performing well in the retail space include The Gap,
Inc. (GPS), L Brands, Inc. (LTD) and
DSW Inc. (DSW). All of them have a Zacks Rank #2
(Buy).
DOLLAR TREE INC (DLTR): Free Stock Analysis Report
DSW INC CL-A (DSW): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
L BRANDS INC (LTD): Free Stock Analysis Report
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